Statistics for all seasons: A two-minute primer on seasonal adjustment

Statistics for all seasons: A two-minute primer on seasonal adjustment - Transcript

Description of visuals

It's easy to spot Mother Nature's prolonged heat waves or sudden cold snaps. Uncovering the ups and downs of the economy is trickier, and seasonal adjustment can help.

(A blue sky gives way to a vibrant green field with hills, trees, clouds and the sun in the background. A male character in a green shirt and blue pants slides in to frame from the right, with a smile on his face. The scene becomes warmer and the man begins to sweat and a grimace forms on his face. A wall of snow falls from above transitioning the season to winter, the man now looks stunned as he is covered in snow and a blizzard begins to set in.)

(The text “Seasonal Adjustment can help” appears on a purple background.)

Seasonal adjustment is a statistical technique used to remove fluctuations in economic data that occur every year at the same time and in a similar fashion.

(The background becomes orange and “Statistical Technique” appears in the center of the screen. The character appears and begins dodging the text “Remove fluctuations in economic data” as it flies in from different directions. The character dodges again looking in the opposite direction as “Every year same time similar fashion” appears in front of him. The scene zooms into the text and the screen goes black.)

This technique can reveal trends that typical seasonal patterns would otherwise overshadow.

(A door opens to reveal the dark silhouette of the character, who turns on a flashlight to reveal the word “Trends” in the darkness. The screen zooms past the silhouetted character back into the field, hills, trees and clouds from the beginning, the character also appears close up to the screen.)

You can probably guess which times of the year are best for selling snow shovels, swimming pools and leaf blowers.

(The character raises his hand to his mouth in a thinking manner and a “thought bubble” pops up. Inside the bubble a calendar appears and begins flipping through the months quickly then disappears being replaced with a snow shovel, swimming pool and finally a leaf blower. A blue background slides in from right to left.)

Tax time sees an uptick in sales of accounting software, and the back-to-school rush also drives predictable purchases.

(The character appears from the left and the calendar again from the top of the screen, the calendar gets nailed to the wall by a tack as it falls. “March” appears on the calendar and an income tax software box falls from above and the character catches it. “March” is replaced by “September” on the calendar and a package of crayons falls from above and is caught by the character.)

The holiday season provides another great example of seasonality: it occurs regularly and has a huge effect on retail spending.

(The scene gives way to the wintery parking lot of a shopping mall called “Generic Store”, which is decorated in Christmas lights and decorations. A crowd gathers in front of the mall and the character appears struggling to get out but falls backwards and disappears into the crowd.)

Let's say that sales in clothing stores are up 40% in December, compared with sales in November. Is that exceptional, or is it just normal for December? Do sales usually jump by 60% during the holiday season?

(A green background slides in from the left and a graph appears with “November” and “December” on the x-axis, an arrow with 40% in the center appears and rises at a 45 degree angle. The graph shrinks out of sight and a question mark appears on screen, being surrounded by other question marks not long after. The character slides in from the left as the question marks disappear. “Sales jump 60% during holidays” appears next to the character as he places his hand on his mouth pondering, then changing quickly to both hand raised in the air in an unknowing manner.)

Seasonal adjustment of data aims to remove the usual monthly ups and downs from the data to help you better understand how the economy is actually changing.

(“Monthly ups and downs” arrives on screen and a large red circle cross lands on it, as the character smiles and gives it a thumbs up. The scene slides out to the left revealing a wintery scene, where the character and his house slide and flip in to overlay it.)

(A blizzard appears outside and the character is surprised but quickly becomes unimpressed crossing his arms. As the snow accumulates higher the character becomes shocked and runs off screen.)

Snowstorms are part of winter life in Canada, but the big ones still make front page news.

(The camera switches to the character's point of view as he picks up a tablet to find a “winter storm alert” in a bright red box pops up on it. The character puts down the tablet and rushes outside.)

So, you might see a drop in sales after a bad blizzard, even in seasonally adjusted data, as people get busy shovelling.

(The character begins to attempt to shovel the snow as fast as he can but cannot keep up, as he shovels his face becomes more and more upset until throwing the shovel off-screen.)

Other calendar-based effects can also influence the level of economic activity. For example, retail sales are often higher on Saturdays, so a month with five Saturdays is likely to see a bump in sales.

(A purple background drops down from above to cover the screen, “Calendar-based effects can influence the level of economic activity” appears on screen over the background. The background colour changes to red as the camera pans quickly left to right revealing the first week of a calendar for April 2017 stopping on Saturday the first 1st. The camera zooms out showing the complete calendar for April 2017, before it flies off screen to the left.)

At the same time, activity in factories tends to dip on weekends, as most workers spend time at home or out shopping!

(The colour of the background changes to blue, a factory appears then a downward pointing arrow and finally an icon of a construction worker in a hard hat appears. The construction worker moves to the right with the camera following, a house appears from the right and stops in front of the worker. The worker then goes into the house and a money symbol appears next to the house. The camera zooms in through the houses door while the background becomes orange.)

These effects are removed from seasonally adjusted data so you don't have to consider them.

(A box with the words “Seasonally Adjusted Data” falls from the above, the box opens and an arrow, a factory, a cloud and a hardhat worker fly out of the box and off screen. The camera zooms into the white of the box then a red line chart is drawn on screen.)

Seasonal adjustment paints a clearer picture of trends and makes it easier to understand how the economy is doing, regardless of the season!

(The camera zooms out from the line chart to reveal that it is a photo hanging on the wall of the character's house, the character passes by from left to right. The scene passes through the window to the outdoor scene from the beginning of the video, the character enters the scene from the right and stands in the center of the screen.)

For more information on seasonal adjustment, including how Statistics Canada applies this technique to its data, please visitwww.statcan.gc.ca.

(A white background fades in and the text “For more information on Seasonal Adjustment” appears on screen, the text flies off screen and is replaced with “Visit www.statcan.gc.ca”. The screen fades to black and the Canada logo appears then fades out.)